US Wheat Review on Monday: Extends rally despite disappointing exports
A last-minute rally helped U.S. wheat futures finish a mixed-trade Monday in positive territory despite lower-than-expected export inspection data.
The Chicago Board of Trade March wheat moved into positive territory shortly before the day's close, gaining 5 3/4 cents to US$5.69 per bushel. The contract traded in an 8 1/2-cent range, topping at US$5.69 1/2. Kansas City Board of Trade March wheat added 6 1/4 cents to US$5.89 1/4, and Minneapolis Grain Exchange March wheat rose 8 3/4 cents to close at US$6.34 in its first day trading in an all-electronic format.
Speculative fund activity was seen as even, according to midday estimates.
"The holidays are upon us," a CBOT floor trader said, looking at the day's light volume.
It won't be until after New Year when "we'll see what kind of volume really comes" to meet wheat's week-long rally, the trader said.
The biggest news in global wheat markets Monday is a sale of 590,000 metric tonnes to Pakistan, said Dan Basse, AgResource president.
"Any time you can sell nearly 600,000 tonnes of wheat, that's a good day," he said, noting the sale was marketed at about US$213.50 per tonne and included mostly Russian and Eastern European product.
With local sellers on the sidelines, U.S. markets were basically left to watch the weather, Basse said. And with no imminent threats, it fluttered in a single-digit range.
Wheat export inspections totaled 9.789 million bushels for the week ended Dec. 18, according to data released by the U.S. Department of Agriculture Monday. The inspections fell below analysts' predicted range of 12-19 million bushels.
"We've rallied right out of any chance at all of doing any business," the trader said.
Kansas City Board of Trade
The weekend's Arctic-inspired weather failed to induce winterkill in areas producing hard red winter wheat, meteorologists said.
"Widespread snow cover exists across both northern hard red and soft red winter wheat belts," said meteorologist Mike Tannura, president of T-Storm Weather. "The southern extent of intense cold (temperature that dropped below zero degrees Fahrenheit) did not coincide with most snow-free wheat, meaning winterkill is unlikely to have occurred during the weekend."
"Gradual warming prevents winterkill through at least early next week, as well," Tannura said.
Cropcast concurred, but stated that "extensive" winterkill occurred the weekend prior to last in a band stretching from southeast Montana across Wyoming and into western Nebraska.
Minneapolis Grain Exchange
Minneapolis demonstrated continue strength Monday.
Cash prices for hard red spring wheat has been trading above delivery values for the last 10 days or so, while Chicago wheat is considerably below cash values, noted Helen Pound, a manager at trading firm Penson GHCO.
"It may be that the lighter volume is exacerbating the intermarket spreads," Pound said. "In the Minneapolis time spreads, it may be a combination of firm protein values and lack of farmer movement."